Writting a contract on a listed property that I am going to try to reinstate the first and short the second.pay seller 600.for property,pay broker 3%
83528.07 1st
39070.00 2nd
house is worth 150000.
If first lender is the foreclosing lender, you can short that second by a lot. If second lender is foreclosing, there really isn't a deal, because the first is current and has no reason to deal with you.
If it is the first, offer 10%, or $3900. They stand to lose it ALL if that house goes to auction, so you have leverage
Good luck, seems like a good deal on the surface. - Dave
Quote:
On 2003-12-12 14:08, TheShortSalePro wrote:
There is no apparent reason for the first mortgagee to accept a short. For that matter, the second has no reason to accept much less than it is due.
Do you plan on purchasing the second?
If you offer to purchase the second via an assignment at a discount, you might build some equity that way.
no, I really thought there was a deal if the first was foreclosing .
If the First one is foreclosing, then they have NO motivation to accept the short (there is plenty of equity in the house: current value 150,000, balance on first 83528.07). The second may not also be motivated to short because they can show up and bid the first one out to protect their investment (amount of equity will allow them to liquidate and cover their additional investment for the first + amount of the second).
A viable option may be purchasing the second mortgage at discount via assignment by convincing them to save on foreclosure, holding, liquidating and Sheriffs sale fees. This way you can create enough equity in the house to bid at the action yourself fro the amount of first, or get the deed to the property from the owner, bring the first current and then liquidate or refinance with profit.
The real question would be: “What is the property truly worth in it’s as is current market condition?” Make sure your comps are correct.
If you think you that you can justify a much lower presentation value to the BPO appraiser, then there might be hope of working with the 2nd. If the new BPO will make it appear to the bank their $39,000 position just went down to $20,000 or so, they probably will be more willing to deal. But you must be certain that you can influence the BPO in a downward motion.
The 1st mortgage is in a great position. They will get their full payoff, regardless of if you pay them, the 2nd pays them, or if someone else at the auction pays them. To protect their postion (mostly in a significant amount), some 2nd's will buy the note from the first and their foreclosing postion soon after they recieve notice of the default. This is prone more to smaller banks and credit unions, but it does happen.
Work on the 2nd, get them to order a new BPO, based off the comps or condition that you have on file. If you dont have a full and complete case as to why they BPO should be less, then the 2nd will certainly have someone represent them at the auction, pay off the first, and resell the property to get their money back. And based on the current financials that you provided, they might even make more money for themselves this way!
If no success there and you are confident in the FMV at $150,000, pay off the existing note (or take them both Sub-2) and buy the property. There would still be a $26,000 spread for you enjoy!
Best of Success!
BAMZ
_________________
"Never Buy Anything . . . Unless Someone HAS TO sell!" (Donald Trump)[ Edited by BAMZ on Date 12/12/2003 ]
If first lender is the foreclosing lender, you can short that second by a lot. If second lender is foreclosing, there really isn't a deal, because the first is current and has no reason to deal with you.
If it is the first, offer 10%, or $3900. They stand to lose it ALL if that house goes to auction, so you have leverage
Good luck, seems like a good deal on the surface. - Dave
Thanks Dave but I'm puzzled as to how a write a contract or should I say the meat of the contract to the listing broker.
thanks,
There is no apparent reason for the first mortgagee to accept a short. For that matter, the second has no reason to accept much less than it is due.
Do you plan on purchasing the second?
If you offer to purchase the second via an assignment at a discount, you might build some equity that way.
ok, so your saying there is nothing here.
The first is about to foreclose and the second is going to lose everything right.
Isn't there a deal.
thanks
Quote:
On 2003-12-12 14:08, TheShortSalePro wrote:
There is no apparent reason for the first mortgagee to accept a short. For that matter, the second has no reason to accept much less than it is due.
Do you plan on purchasing the second?
If you offer to purchase the second via an assignment at a discount, you might build some equity that way.
no, I really thought there was a deal if the first was foreclosing .
Doesn’t look like a Short Sale deal to me.
If the First one is foreclosing, then they have NO motivation to accept the short (there is plenty of equity in the house: current value 150,000, balance on first 83528.07). The second may not also be motivated to short because they can show up and bid the first one out to protect their investment (amount of equity will allow them to liquidate and cover their additional investment for the first + amount of the second).
A viable option may be purchasing the second mortgage at discount via assignment by convincing them to save on foreclosure, holding, liquidating and Sheriffs sale fees. This way you can create enough equity in the house to bid at the action yourself fro the amount of first, or get the deed to the property from the owner, bring the first current and then liquidate or refinance with profit.
The real question would be: “What is the property truly worth in it’s as is current market condition?” Make sure your comps are correct.
Dmitry.
[ Edited by Dmitry on Date 12/12/2003 ]
If you think you that you can justify a much lower presentation value to the BPO appraiser, then there might be hope of working with the 2nd. If the new BPO will make it appear to the bank their $39,000 position just went down to $20,000 or so, they probably will be more willing to deal. But you must be certain that you can influence the BPO in a downward motion.
The 1st mortgage is in a great position. They will get their full payoff, regardless of if you pay them, the 2nd pays them, or if someone else at the auction pays them. To protect their postion (mostly in a significant amount), some 2nd's will buy the note from the first and their foreclosing postion soon after they recieve notice of the default. This is prone more to smaller banks and credit unions, but it does happen.
Work on the 2nd, get them to order a new BPO, based off the comps or condition that you have on file. If you dont have a full and complete case as to why they BPO should be less, then the 2nd will certainly have someone represent them at the auction, pay off the first, and resell the property to get their money back. And based on the current financials that you provided, they might even make more money for themselves this way!
If no success there and you are confident in the FMV at $150,000, pay off the existing note (or take them both Sub-2) and buy the property. There would still be a $26,000 spread for you enjoy!
Best of Success!
BAMZ
_________________
"Never Buy Anything . . . Unless Someone HAS TO sell!" (Donald Trump)[ Edited by BAMZ on Date 12/12/2003 ]